Current Attempt in Progress

1. Current Attempt in Progress

The GoldenValley Company’s copy department, which does almost all of the photocopying for the sales department and the administrative department, budgets the following costs for the year, based on the expected activity of 4,200,000 copies:

Salaries (fixed)		$84,000
Employee benefits (fixed)		10,500
Depreciation of copy machines (fixed)		8,400
Utilities (fixed)		4,200
Paper (variable, one cent per copy)		42,000
Toner (variable, one cent per copy)		42,000

The costs are assigned to two cost pools, one for fixed and one for variable costs. The costs are then assigned to the sales department and the administrative department. Fixed costs are assigned on a lump-sum basis, 40 percent to sales and 60 percent to administration. The variable costs are assigned at a rate of 2 cents per copy.
Assuming 4,020,000 copies were made during the year, 2,100,000 for sales and 1,920,000 for administration, calculate the copy department costs allocated to sales and administration.

Costs allocated to sales		enter a dollar amount
Costs allocated to administration		enter a dollar amount

2. Current Attempt in Progress

Richetti Metal Works received an offer from a big-box retail company to purchase 2,880 metal outdoor tables for $208 each. Richetti Metal Works accountants determine that the following costs apply to the tables:

Direct material		$124
Direct labor		48
Manufacturing overhead		67
	Total		$239

Of the $67 of overhead, $13 is variable and $54 relates to fixed costs. The $54 of fixed overhead is allocated as $1.06 per direct labor dollar.
(a) What will be the real effect on profit if the order is accepted?

The profit will select an option                             by $enter a dollar amount  .

3. Current Attempt in Progress

The following are six cost pools established for a company using activity-based costing. The pools are related to the company’s products using cost drivers.
For each of the preceding cost pools, identify a possible cost driver. (Each answer is used only once, select the best answer for each cost pool.)

		COST POOLS		COST DRIVER
1.		Inspection of raw materials		select an option for Inspection of raw materials
2.		Production equipment repairs and maintenance		select an option for Production equipment repairs and maintenance
3.		Raw materials storage		select an option for Raw materials storage
4.		Plant heat, light, water, and power		select an option for Plant heat, light, water, and power
5.		Finished product quality control		select an option for Finished product quality control
6.		Production line setups		select an option for Production line setups

4. A cost pool is

not necessary in cost-plus contracts.

useful when separating mixed costs into their fixed and variable components.

allocated using a single allocation base.

a method of allocating costs among service departments.

5. Which of the following is a measure of activity used to distribute indirect costs?

Cost objective

Cost pool

Cost driver

Cost unitization

6. What costs are affected by the manager’s decisions for which the manager should be held accountable?

Indirect costs

Controllable costs

Sunk costs

Pooled costs